Reflection on the Property Market 2020

When we reflect on the year now gone, one of the biggest questions many economists and property analysts have asked, and addressed – is why didn’t the Australian property market crash in response to the global pandemic?

When the COVID19 outbreak began, the headlines were filled with doom and gloom as we headed to our first recession in over 28 years…yet somehow the property market has pulled through remarkably well, and in some areas, such as the Sunshine Coast, is performing at unprecedented levels.  The overall catastrophic crash which some predicted could see one-third of value wiped off Australian properties, never happened.

Leading industry market monitors, CoreLogic have been following the movements and noted an increase in values and an acceleration in growth in October and November, and this momentum has continued. Sydney and Melbourne are still below peak levels, but many smaller capital cities and lifestyle regions are thriving.

CoreLogic suggests the reason the market has fared so well amidst these challenging circumstances can be attributed to a few factors.

  1. The cost of borrowing money is at historical lows, with the reserve bank reducing the official cash rate target by 65 basis points to 0.1% – this influences lending rates, and banks are now offering record low mortgage rates.
  2. Mortgage repayment deferrals have acted as temporary stoppers to forced sales – the banks have worked with owners to keep a roof over people’s heads and stop the market being flooded with mortgagee in possession fire sales.
  3. Government monetary policy with provided financial stimulus to the most vulnerable in society, as well as enabling employers to retain staff.
  4. Housing incentives, such as the Federal Government’s HomeBuilder grant on new homes and major renovations, had a positive impact on the building industry almost overnight (when announced), and has now been extended until March 2021.

All in all, Australia has fared much better than many parts of the world – economically and socially; we seem to have the spread of the virus under some sort of control, keeping our citizens as safe as possible from contracting this insidious disease.

Many of us have got out and travelled within our own region and state and explored the wonders of where we live, with overseas holidays not an option.  There is always a silver lining to even the darkest of clouds.  We should all be proud of the part we played to stay safe and follow guidelines so we could get back to as normal a life as possible and reconnect again.

Happy New Year.  We look forward to continuing to bring you our news and views in 2021!

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